Bankruptcy is generally seen as a quick fix solution to financial problems. Yet the effects of bankruptcy are long term and can hinder your ability to get employment, house, and any type of credit. It is important to weigh the pros and the cons of bankruptcy before making a major choice.
Admittedly, bankruptcy comes with a number of benefits. First and foremost it annihilates most of your debt. It can aid you with missed debt payments, defaults, repossessions and lawsuits. If you have horrible credit, it can get you started on rehabilitation.
Bankruptcy will hinder the phone calls from creditors, collections letters, repossessions, declined charge authorizations, cancelled credit cards, and lawsuits. You can also keep your car if you keep up on the payment; bankruptcy will also allow you to keep your home if you remain current on the payments.
Bankruptcy allows you to stop foreclosure and permits you to make monthly payments on amounts you have owed in the past. Finally, it stops creditors from making a claim after it is filed, even if your financial situation changes.
On the other hand, bankruptcy law offers a “fresh start” but only every six years in most instances. Bankruptcy will remain on your credit report for ten years and has a severe negative impact on your credit rating. Although some lenders allow for home loans after one year, filing bankruptcy might require a wait of two years before it is possible to buy a home.
Bankruptcy does not wipe out most tax debt. It does not clear away student loan debt. It requires that you give up your credit cards. It might cause you to lose some of your things, and unfortunately bankruptcy carries a stigma that can be embarrassing.
If you are not sure whether to file bankruptcy or not, call your creditors to see what type of repayment plan they can work out with you. While bankruptcy is an option, in most cases it should be seen as a last resort.
Mallory McGuinness is employed by a collections agency that works with a debt collection lawyer. She also does pieces on business, finance, consumer spending and collections agencies. Get a totally unique version of this article from our article submission service
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